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2016 (4) TMI 584 - AT - Income TaxTreatment to share trading loss - whether treated as deemed speculation loss? - Held that:- We find that the ratio laid down by the Hon’ble Calcutta High Court in the case of RPG Industries Ltd. (2011 (3) TMI 656 - CALCUTTA HIGH COURT ) clearly supports the conclusion of the CIT(A) as laid down s laid down that by Explanation to s. 73, a legal fiction has been created whereby loss suffered by a company in share transactions is to be treated as a speculative loss within the meaning of s. 73, notwithstanding the fact that there was actual delivery of scrips of shares and the transaction is not within the purview of the definition of speculative transaction in s. 43(5). It was laid down that by virtue of Explanation to s. 73, even the transactions which are not speculative transactions within the meaning of s. 43(5) are deemed to be speculative transactions. The Hon’ble Court has explained that if the contention of the assessee that the provision of s. 43(5) of the Act defining speculative transaction should prevail even if the case comes within the purview of the Explanation to s. 73 is accepted, effect cannot be given to the Explanation at all and it would be rendered meaningless and that it was the intention of the legislature that if the assessee is a company indicated in the Explanation to s. 73, there shall be a different definition of speculation business than the one applicable to other types of assessees. The Hon’ble Court further held that there is nothing illegal for the legislature to enact two different definitions of speculation business for two different categories of assessees. The Hon’ble Court has explained that although ordinarily the object of an Explanation is not to enlarge the scope of the original section that it is supposed to explain, if on a true reading of an Explanation it appears that it has widened the scope of the main section, effect should be given to the legislative intent and that only one interpretation of the Explanation to s. 73 is possible and that goes against the assessee and therefore there is no question of adopting a view which is favourable to the assessee. CIT(A) treating the share trading loss as deemed speculation loss confirmed - Decided against assessee Genuity of trading loss - Held that:- CIT(A) rightly held that the loss in question had to be regarded as genuine loss. The identity of the companies from where purchase of shares was made by the Assessee stood established as the said company were assessed to income tax and their IT acknowledgement for the relevant AY was also filed. Bank statement evidencing payments through banking channels were filed . The demat statement evidencing actual transfer of shares was also filed. The sale and purchase contract notes were produced. The brokers were registered brokers with the Stock Exchange. In these circumstances, the loss in trading of shares had to be regarded as genuine. - Decided against revenue
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